The pension reform approved by Congress has 92 articles. – Reference image
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Last week the House of Representatives decided to accept the text of the pension reform that the Senate had approved. With that decision, the initiative of Gustavo Petro’s Government ended its legislative process; Now the presidential sanction is missing.
In a live event organized by this newspaper, Mauricio Olivera, former president of Colpensiones and administrative and financial vice-rector of the U. de los Andes, and Andrés Izquierdo, expert lawyer in pensions and manager of Integral Soluciones Pensionales ISP, answered several of the doubts that members have about how the new system will work.
Experts pointed out that the decisions of the Constitutional Court can still change the course of the initiative, considering that several opposition congressmen have already announced that they will demand the reform due to possible procedural defects. It is also necessary to remember that Luis Fernando Velasco, Minister of the Interior, reported this week that the Government will present a project to improve “three or four points” of the project before its entry into force.
In context: Government is preparing a project to correct problems with the pension reform
The two experts left the same recommendation: it is key for members to review their work histories.
For whom does the pension reform apply?
The number of weeks you have contributions for the date on which the project comes into effect (July 1, 2025) defines whether you stay in the current regime or if you move to the new system:
▶️ Law 100 of 1993 will continue to apply to men who have 900 weeks of contributions or more, those who have less remain in the new system.
▶️ Law 100 of 1993 will continue to apply to women who have 750 weeks of contributions or more, those who have less remain in the new system.
When does the reform take effect?
The new pension system will be launched on July 1, 2025.
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How do the pillars work?
▶️ Solidarity pillar: elderly people living in poverty who cannot obtain a pension (65 years of age for men and 60 years of age for women) and men over 55 years of age and women over 50 years of age who have a loss of work capacity equal to or greater than 50% and They do not have a source of income, they will receive a basic income that will correspond at least to the extreme poverty line (about $223,000).
▶️ Semi-contributory pillar: Men over 65 years of age and women over 60 years of age who have contributed between 300 and less than 1,000 weeks will receive a life annuity:
- If you are a beneficiary of the solidarity pillar, contributions in Colpensiones will be adjusted for inflation and the savings in private funds will be added.
- If you are not a beneficiary of the solidarity pillar, the contributions made in Colpensiones will be adjusted for inflation, will be increased by 3% and there will be a subsidy equivalent to 20% for men and 30% for women, plus the amount saved in private funds.
▶️ Contributory pillar: All members will contribute to Colpensiones for up to 2.3 minimum salaries ($2,990,000 in 2024) and from then on to one of the pension fund administrators (AFP).
▶️ Voluntary savings pillar: for those who want to make extra savings for their pension.
How is the weeks requirement to retire?
*For men, the minimum weeks requirement will be 1,300.
* For all women, the requirement will begin to decrease in 2025 (that year it will remain at 1,275) until it reaches 1,000 weeks in 2036. The project also establishes that women who reach the pension age (57 years) and do not have the weeks, will be able to obtain a benefit of 50 weeks for each child up to three. In practice it means that some women will be able to retire with 850 weeks.
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Does the retirement age change?
No, the age is the same: 57 years for women and 62 years for men. To access the solidarity and semi-contributory pillars, the age will be 62 years for women and 65 years for men.
How does advance benefit work?
Affiliates who enter the new system and who are 65 years old if they are men and 62 years old if they are women can benefit from the early benefit. This mechanism allows those who have 1,000 weeks to retire and continue to have the contributions they need deducted from their allowance.
What will happen to the money saved in private funds?
The AFPs will continue to manage the savings they currently have in their possession ($421 billion as of March). As members retire, the funds will pass the money to Colpensiones.
Also read: The fate of the pension reform in the Constitutional Court
What is the savings fund?
It is a new fund that creates the initiative to save and invest part of the contributions that enter Colpensiones. It is important to guarantee the long-term fiscal sustainability of the system. The project establishes that the fund will be in the hands of the Bank of the Republic.
What will happen to those who contributed up to 299 weeks?
People who contributed up to 299 weeks will be returned what they saved, in Colpensiones adjusted for inflation and in private funds (in case savings have been made in an AFP), adjusted for inflation plus returns.
Where will you have to quote?
All people who enter the new system will contribute to Colpensiones for up to 2.3 minimum wages ($2,990,000 in 2024) and from then on in a private fund. That is, if you earn up to 2.3 minimum wages you will only contribute in Colpensiones, but if you earn more than that amount, you will contribute a portion in Colpensiones (up to 2.3 minimum wages) and from then on in a private fund. The reform allows those who remain in the transition regime to move between Colpensiones and the AFPs even if they are less than 10 years away from the pension age.
